topic Apparent TurboTax bug for inherited IRA in Retirement tax questions

Apparent TurboTax bug for inherited IRA

nphelge — Wed, 19 Feb 2025 18:10:57 GMT

I'm using TurboTax Deluxe 2024 on Windows. The steps are the following:

Create a MFJ return for Dad and Mom, indicating Dad passed in 2024
Add a 1099-R with the following info and select Continue:
- $1000 for boxes 1 and 2a for the RMD amount
- $200 for box 4 for the federal income tax withheld
- 4/Death for box 7
- IRA/SEP/SIMPLE box checked
On the next page, select that the IRA was inherited from the spouse, and enter the name for Dad and 2024 as the year
On the next page, select that Mom put the inherited funds into Mom's own IRA account in 2024
Now comes the odd part: the next page poses the following question:

You told us that Mom rolled over the entire $1000 distribution to another qualified account.

We see that $200 was withheld from this distribution.

Did Mom deposit $200 from your own funds in addition to the $800 mom received from the distribution?
- Yes, Mom added $200 to make up the difference
- No, Mom didn't add Mom's own funds to make up the difference.

Why is it asking if the RMD amount of $1000 was rolled over into a qualified account? It is the RMD. The prior page asked if Mom rolled over the inherited funds from Dad's IRA into her own IRA. Why is it asking if Mom 'made up the difference' of the $200 held for federal income tax?

This makes no sense to me and appears to be a bug - it happens for every 1099-R I try to enter this way. Does anyone know why it would be asking this question given the scenario? Thanks in advance.

Re: Apparent TurboTax bug for inherited IRA

dmertz — Wed, 19 Feb 2025 22:23:49 GMT

I agree, TurboTax provides misleading guidance here. The problem is with:

"On the next page, select that Mom put the inherited funds into Mom's own IRA account in 2024"

If no other amounts were taken from the inherited IRA, do not select this. If the Form 1099-R included other amounts distributed to your mother that your mother rolled over to her own IRA, you'll need to split the Form 1099-R into two, one for the portion rolled over and another for the portion not rollover over which would include the RMD.

Re: Apparent TurboTax bug for inherited IRA

nphelge — Wed, 19 Feb 2025 22:37:46 GMT

Thanks for the reply - that TurboTax prompt makes no sense. The inherited funds were definitely rolled into Mom's own IRA account in 2024 - the question mentions nothing about the RMD or other amounts withdrawn.

Re: Apparent TurboTax bug for inherited IRA

dmertz — Thu, 20 Feb 2025 01:11:14 GMT

What's not clear is that the question is being asked only in regard to the particular distribution being entered, not in regard to the entire IRA. You mentioned that the distribution was an RMD. An RMD is not eligible for rollover, so this distribution was not permitted to be rolled over to your mother's own account.